A leading economics thinktank predicted today that the UK economy grew by 0.4% in the first quarter of 2010, further allaying fears of a double-dip recession.

Economists at the National Institute of Economic and Social Research said that the heavy snow in January had probably not derailed Britain's recovery. They also estimated that the economy had grown by 1.1% since its trough last September, clawing back some of the output destroyed by the worst downturn since the second world war.

The forecast is not official, and come two weeks ahead of the first official estimate of Q1 GDP. If the forecast is accurate, then the UK economy would have expanded for two straight quarters, having grown by 0.4% in the last three months of 2009.

However, the independent thinktank also warned that Britain's output was still 5.4% lower than it was in early 2008, having fallen by more than 6% during the recession. "The growth rate is still lower than the trend rate of growth of potential output, so the output gap is still increasing," it said.

The disruption caused by the winter weather, added to the end of the temporary cut in VAT, had led to fears that the UK economy would stumble back into recession, but most analysts now believe it is still growing. Yesterday the Organisation for Economic Co-operation and Development (OECD) predicted that Britain's economic growth would outstrip many other major economies over the first half of 2010.

NEISR's predictions came just hours after the release of encouraging data from the manufacturing sector, showing that activity bounced back strongly in February. Manufacturing output rose 1.3% in February, almost twice as fast as economists' forecasts for a 0.7% rise and more than reversing January's 1% decline.